Zurich Financial Services has announced the results of a comprehensive review of its life and general insurance operations with the aim of increasing profitability and growth.
The initiatives developed through the review concentrate on:
· Further improving profitability in life insurance by improving operating efficiency and redesigning the segment's business model;
· Fostering profitable growth in general insurance by focusing on four target market segments and leveraging the Group's global network in the commercial businesses;
· Coordinated approaches to functions essential to analyse and manage the opportunities and risks inherent in the insurance business.
Zurich said the realignment marked the second phase of the recovery process it had been implementing over the past 12 months.
The recovery process is focused on improving the group's profitability to achieve a 12% return on equity based on business operating profit after tax and regaining its AA financial strength rating in the medium term, Zurich said.
It said it had a target of a minimum of $200m after tax savings from 2004 onwards following the implementation of the review's recommendations.
In general insurance four target market segments have been identified. They are:
· Global corporate customer business, which will offer coverage for both international and large domestic risks. In 2003, this business unit achieved a premium volume of $7bn,
· Europe personal and business customers where significant expense savings and synergies from the consolidation of the United Kingdom and Continental European business divisions are expected. In 2003, this segment achieved gross written premiums of $10.3bn,
· US personal customers where Zurich will capitalize on the strong Farmers brand and its unique reciprocal structure. In 2003, the Farmers Exchanges, which Zurich manages but does not own, achieved gross written premiums of $13.8bn, and
· US small business, which is the largest commercial segment in the United States. Together, Farmers and Zurich are among the largest providers in this market with a combined premium volume of approximately $4bn.
In each segment, Zurich said it would integrate business and service capabilities and improve processing efficiency and delivery mechanisms.
In addition to the four market segments identified, the group said it would continue to operate its US other commercial business and its international business.
Chief executive James Schiro said: “After having delivered on our promise in 2003, I am confident that we have improved the processes and financial discipline and are creating a culture that will allow us to grow profitably in the future.”
